How to Balance Your Church Board

Written by Valerie West on May 04, 2021 in IRS Compliance

5 minute read

Church Planter, you are in the most exciting and challenging time of your life! You may be realizing by now it takes a team of committed individuals to start a church and maintain it successfully. The pastors, musicians, and volunteers are all vital to a new church. However, another group of individuals fulfills one of the most critical roles a church can have.

The Board of Directors plays a crucial role in helping you, the Pastor and visionary, establish and lead your church. Today we will define the Board of Directors, the most vital board member positions, and why your Board must be balanced.

What is a Board of Directors?

The Board of Directors is defined as a group of individuals that constitutes the decision-making body for the organization. They are responsible for establishing a firm undergirding for your organization. While your Board may contain many different individuals, three specific positions must be fulfilled.

1. The President.

The role of the President is defined as the individual in charge of the day-to-day activities of the church. More importantly, the President casts the vision of the church. Most often, the Senior Pastor fills this position as they are providing leadership to the whole church.

2. The Treasurer.

The role of the Treasurer can be best defined as the overseer of the church's financial management. The Treasurer has three primary responsibilities to ensure the church's finances and records are transparent and compliant. These are:

  1. Establish financial systems and accountability controls. This typically includes accounting, reimbursement policies, payroll, and IRS reporting.
  2. Create a set of reports that keep the Board of directors updated on the church's financial condition.
  3. Understand the laws that govern the management of the church's tax-exempt status and ensure compliance with the law.

You may be under the impression that the Treasurer has to manage the church's books, but this is not a requirement; the Treasurer could oversee a volunteer or a paid staff member assigned to handle the church's finances. We understand not every church is in the position to hire someone to take care of this aspect of the ministry. If this is you, StartCHURCH's full-time bookkeepers are experts at nonprofit accounting and would love the opportunity to assist your church in keeping accurate financial records.

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3. The Secretary.

The role of the Secretary can be defined as the custodian of the church's legal documents. This role is critical because this person usually handles the records and documents that directly affect the church. Like the Treasurer, the Secretary also has three primary responsibilities:

  1. Manage and maintain the governing documents of the church.
  2. Schedule board meetings, communicate with all board members, set the meeting agenda, and ensure that minutes are properly recorded and stored.
  3. Stay up to date with reporting requirements such as annual reports, state sales tax exemptions, 501(c)(3) status, and more to keep the organization in compliance at State and Federal levels.

3 Documents Board Members Should Sign

At this point, you may be asking yourself, "Is there specific paperwork that has to be filed for someone to officially serve on the board of directors?" Great question! The answer is "Yes!"

Let's discuss the 3 most important ones:

1. Acceptance to Serve on the Board

When a new board member is added, it is very important for them to sign an incoming board member statement composed of three declarations.

  1. They accept the appointment.
  2. They will actively participate on the Board.
  3. They agree to submit to and abide by the bylaws of the church.

Your bylaws should have specific language that protects the church if a board member turns against the church and Pastor. Unfortunately, these cases happen more often than you might think. Don't let this process intimidate you, Pastor. If you haven't set up your Bylaws yet and aren't sure what should or should not be included, please give us a call 877-494-4655. We would love the opportunity to assist you with all of your governing documents and have church planting experts standing by to answer your questions.

2. Conflict of Interest Statement

Ensure your Board of directors follows best practices by having each member sign a conflict of interest statement every year. This is a supporting statement to the conflict of interest policy, which is recommended to be included in the church's corporate records. In essence, this document contains four declarations:

  1. They have a copy of the conflict of interest policy.
  2. They have read and understood the policy.
  3. They agree to comply with the policy.
  4. They understand the church is a tax-exempt, charitable organization and must engage in activities that accomplish its purpose to maintain tax-exempt status.

3. Waiver of Notice

Every board member should sign a waiver of notice before a board meeting begins. Many churches have had their board meetings legally nullified by courts because they failed to meet the proper notice requirements when conducting them. The waiver of notice is a signed statement by each board member where they waive the formal notice requirements and attend the board meeting waiving that right.

*Call StartCHURCH today at 877-494-4655 to get a FREE Board Member Invitation Letter!

What is a Balanced Board?

A balanced board of directors is comprised of a majority of individuals unrelated and uncompensated.

Here are two examples:

Relationships: If a husband and wife are on a church board of directors, there would need to be at least three additional members on the Board who are not related (by blood or marriage) to the Pastor or his wife.

Compensation: If the church pays the senior Pastor and the Assistant Pastor, there would need to be at least three additional members on the Board who are not receiving compensation from the church.

Having a balanced board of directors ensures that all decisions are made in the church's best interest, as opposed to the best interest of one particular family group or the paid individuals on the Board.

The Confidence to Lead Well

Pastor, having these positions and a balanced board established and in order are vital to the growth and health of your organization. If you have questions, give one of our church planting specialists a call 877-494-4655. We will gladly help make sure you are on the right track for compliance and give you your FREE resource to establish your board of directors.

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Please feel free to comment. We always appreciate good dialogue. However, we do moderate each comment to ensure that it is on topic and not derogatory to other participants. We ask that you keep your comments brief and pertinent to the topic so that others may benefit.

Blessings,
Raul Rivera


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